Thinking of buying our first home
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Thread: Thinking of buying our first home

  1. #1
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    Post Thinking of buying our first home

    Hi,

    We are saving for our first home here in Vancouver, here's a brief description of our situation

    Wife: 29, Government job, makes 75.000k a year (Masters degree accomplished here in Canada, fully paid for)
    Me: 28, New career, made 58.000k this year, should make around 65.000 next year (No schooling more than High school and one year university back in South America)
    No kids (yet)

    I made 25k in 2015, that's why I decided to change careers and I am quite pleased with the results, but I expect to keep making more, people in my position can make around 80k.

    We saved 16.000 in 2016, taking into considerations the expenses we had (I bought a couple suits for work and personal use, we got a new car and had a small vacation trip to Hawaii) among other things, I don't think is great, but better than before (always in debt). We enjoy life, dine out couple times a week, movies, small trips and have fun in general, I think we have to enjoy life, but always within reason and in a budget.

    We now are thinking of buying our first home. We both work in Downtown Vancouver. Currently renting in Coquitlam(1 hour drive to work) a tiny 2br 1 washroom suite for 1.100 /month, it's not very comfortable, basically does not have a living room.... we can live like this for one more year but I think much longer. I don't think we are quite capable of buying anything anywhere near DT Vancouver. We want 2br 2 washrooms (thinking about having kids), we want something newer and more than 800sqft, the only place that seems to have something like that is here in Coquitlam, we would not move anywhere further away from the city, wife refuses to consider Surrey (cheaper area, but it seems like its not as safe).

    Our goal is to save around 20-25k next year. Would you consider buying in our situation? of course we are also scared of the bubble, if it ever bursts and we are in it, it would be a big hit.

    Sorry for the grammar and thansk for reading!!


  2. #2
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    Quote Originally Posted by tavogl View Post
    Would you consider buying in our situation?
    Speaking personally, no. For a few reasons.

    1. You're in arguably the most deluded housing market in the country. It WILL burst, and the writing is already on the wall.

    2. Even if it doesn't, renting and investing your savings will almost certainly be better for your net worth.

    3. You're in danger of depending on two incomes to get the house you would want. If that happens and someone loses their job, well, you don't want to imagine that scenario.

    4. You brought in $133k, spent a mere $13,200 on rent last year and managed to save $16k. I don't mean to be blunt, but you have literally no idea how to save. That is colossal overspending.

    In my opinion, stay off realtor.ca and make 2017 the year you learnt how to reduce your spending, massively. With that rent, saving the entirety of your wife's income should be a piece of cake. My rent is $1,400/month and my salary (approximately similar to yours last year) looks after four people, and I still save.

  3. #3
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    You are right to worry about a bubble correction.

    Interest rates will determine when the correction will happen and at this point it's a minor concern.

    So what would your mortgage be if you bought next year at what %?

    Now add 3% can you make it threw the correction. The answer is likely yes you just need to be in this house with equity.

    When the mortgage comes due the bank/mortgage holder will valve your house at current market conditions. If you have lost all your equity plus some they may require you to put another 10k-20k down. Not likely possible.

    So don't buy a house with minimum down and have a clear accelerated plan to pay down mortgage.

    I agree you likely need to save a little better but don't live for savings and house purchase. You need life and fun trips and nights out maybe just not like before.

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  5. #4
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    Don't forget that being a homeowner comes with additional expenses, above and beyond mortgage and insurance. Let's not forget the long-term commitment as well. Buying a house is easier than selling it. Carefully weigh the pros and cons of renting versus ownership. It might be wise to find a (more expensive) place to rent that is closer to downtown where you work. Let's not forget the money saved from not driving 2 hours a day to work!

  6. #5
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    Going from 25k to 58k within a year is pretty nice feat. Mind sharing the profession? Curious as only high school equivalent education is there a chance your job is volatile where it could affect servicing of the loan?
    Last edited by redsgomarching; 2017-01-11 at 10:38 AM.

  7. #6
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    Quote Originally Posted by bobsyouruncle View Post
    Speaking personally, no. For a few reasons.

    1. You're in arguably the most deluded housing market in the country. It WILL burst, and the writing is already on the wall.

    2. Even if it doesn't, renting and investing your savings will almost certainly be better for your net worth.

    3. You're in danger of depending on two incomes to get the house you would want. If that happens and someone loses their job, well, you don't want to imagine that scenario.

    4. You brought in $133k, spent a mere $13,200 on rent last year and managed to save $16k. I don't mean to be blunt, but you have literally no idea how to save. That is colossal overspending.

    In my opinion, stay off realtor.ca and make 2017 the year you learnt how to reduce your spending, massively. With that rent, saving the entirety of your wife's income should be a piece of cake. My rent is $1,400/month and my salary (approximately similar to yours last year) looks after four people, and I still save.
    Hi bobsuruncle,

    Thanks for answering!

    I agree with you that we didn't save enough, we really didnt plan much as we did not know what to expect (how much i'd make). I honestly don't know how we'd save my wifes entire salary, it does not look realistic. We will not live slaves of savings, life is way to short to do so, having said that, I am sure we can save more in 2017, I am targeting 20% of our income should be saved. You mention we made 133,000 last year... yea, but don't forget we are heavily taxed. I paid more than 13k in taxes, wife did even more. I also didnt include contributions matching rrsp in savings, which is another 2k for me or so, ill ask my company to increase how much they deduct me to the max (not sure how much is it) so they match it and we save a bit more there.

    as for everyone else, thanks for sharing your ideas and thoughts, they are all appreciated.

    Regards

  8. #7
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    I think 2 people on a 58k income should be easily doable! Many entire families of 4 or 5 people live off less than that and do just fine. Just have to be conscious of your spending. Besides, it would just be for a year or two. Not like this would be your life forever. Sacrifice in the short term for long term gain - you guys could have 100k saved in 2 years!

  9. #8
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    Quote Originally Posted by bobsyouruncle View Post
    Speaking personally, no. For a few reasons.1. You're in arguably the most deluded housing market in the country. It WILL burst, and the writing is already on the wall.2. Even if it doesn't, renting and investing your savings will almost certainly be better for your net worth.3. You're in danger of depending on two incomes to get the house you would want. If that happens and someone loses their job, well, you don't want to imagine that scenario.4. You brought in $133k, spent a mere $13,200 on rent last year and managed to save $16k. I don't mean to be blunt, but you have literally no idea how to save. That is colossal overspending. In my opinion, stay off realtor.ca and make 2017 the year you learnt how to reduce your spending, massively. With that rent, saving the entirety of your wife's income should be a piece of cake. My rent is $1,400/month and my salary (approximately similar to yours last year) looks after four people, and I still save.
    whatever is said above, agree 100%. noone knows the future, but given the different parameters, there are less chances you will lose by not buying. saving more and having that cushion will ALWAYS help.

  10. #9
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    Quote Originally Posted by tavogl View Post
    I honestly don't know how we'd save my wifes entire salary, it does not look realistic. We will not live slaves of savings, life is way to short to do so
    You're still young, so it's not as big a deal, but I think you'll regret it in the future if you don't reevaluate your philosophy. Saving the entirety of your wife's income is very realistic, especially if you're going to earn more this year. As I said, I house, feed, and clothe four people on what you earned last year, spent $300/month more on rent, and probably have much higher utilities. But we also still had one three night vacation in winter and one 18 night vacation in summer.

    You might think the reason for earning good money now is to enjoy it now, but it's short-sighted. If my wife was earning $75k/year we'd be saving every penny and living as we do now in order to obtain financial independence. We have sacrificed that kind of goal so that my wife (who also has a degree) can stay at home full time with the children.

    If you begin saving $60k/year this year, and get a return of 6%, by the time you are 40 you will be a millionaire earning at least $40k/year just on interest.

    I recommend you read this series of posts by a couple who retired at 31: http://www.millennial-revolution.com...ndy-back-then/

  11. #10
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    Quote Originally Posted by bobsyouruncle View Post
    You're still young, so it's not as big a deal, but I think you'll regret it in the future if you don't reevaluate your philosophy. Saving the entirety of your wife's income is very realistic, especially if you're going to earn more this year. As I said, I house, feed, and clothe four people on what you earned last year, spent $300/month more on rent, and probably have much higher utilities. But we also still had one three night vacation in winter and one 18 night vacation in summer.

    You might think the reason for earning good money now is to enjoy it now, but it's short-sighted. If my wife was earning $75k/year we'd be saving every penny and living as we do now in order to obtain financial independence. We have sacrificed that kind of goal so that my wife (who also has a degree) can stay at home full time with the children.

    If you begin saving $60k/year this year, and get a return of 6%, by the time you are 40 you will be a millionaire earning at least $40k/year just on interest.

    I recommend you read this series of posts by a couple who retired at 31: http://www.millennial-revolution.com...ndy-back-then/
    I totally agree with you. My situation is similar to yours. My wife stays home with 2 kids, I make 80K/year, spend the bare minimum, eat out once in a while, and save about 25K/year. We live on about 25K/year for a family of 4. As the kids grow older, the expenses will be bigger. So we try to grow as big of a snowball as possible now so when they're older we can have a lot more saved up which will snowball faster and produce more. Warren Buffet made 99% of his wealth after age 50 after all!


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